A woman with fizz and bottle

Indra Krishnamurthy Nooyi is not afraid of being outspoken. When she addressed Columbia University's Business School last year in her capacity as chief financial officer of Pepsi's parent company, PepsiCo, she compared each of the five continents to a finger on the hand, with the United States representing the middle finger.

She said: 'Each of us must be careful that when we extend our arm in a business or political sense, we take pains to ensure we are giving a hand ... not the finger ... Unfortunately, I think this is how the rest of the world looks at the US.'

After being accused of being unpatriotic, she issued an apology on Pepsi's website, thereby exercising 'communication' and 'conscience' - two of what she calls her 'Five C's to success' (the others being 'competence', 'compass', and 'confidence').

Overall, it doesn't seem to have done any harm, because last week she was appointed chief executive at the drinks giant - one of the most prestigious jobs in corporate America.

The appointment is a source of both pride and embarrassment for India. Pride because, when Nooyi replaces Steve Reinemund on 1 October to become Pepsi's fifth CEO, she will create history by becoming the first Indian woman to head a Fortune 100 company; embarrassment because, at almost the same time, a pesticide controversy has led some Indian federal states to impose a ban on Pepsi and Coca-Cola products.

Nooyi was born on 28 October 1955 and grew up in the south Indian town of Chennai (formerly Madras). Friends from Madras Christian College, where she studied for a Bachelor of Science degree three decades ago, remember her as a tough and independent team player whose first taste of business was managing college magazine advertising.

After completing a postgraduate diploma in business administration at the Indian Institute of Management in Kolkata, she worked at textile firm Mettur Beardsell and later as product manager for sanitary towels at Johnson & Johnson in Chennai - one of her most challenging roles, she says, because of the limited awareness of female health issues in India at the time.

In 1978 she won a place at Yale School of Management, where she attended classes by day and worked as a receptionist at night to make ends meet. It was there that she became known for working in her sari - something she has continued throughout her career, often attending PepsiCo functions in the colourful national dress.

After graduating, she spent six years at Boston Consulting Group, where she worked on international strategy projects. Between 1986 and 1994, she held senior management positions with Motorola and engineering firm ABB before joining PepsiCo in 1994.

At Pepsi she has played a pivotal role: she helped to spin off the company's restaurant businesses, such as Kentucky Fried Chicken, Taco Bell and Pizza Hut, into a new firm, Tricorn, took the lead in the acquisition of Tropicana fruit juices in 1998, and contributed to the $13.8bn acquisition of Quaker Oats in 2001.

Even so, the timing of her promotion was unexpected. Gary Hemphill, managing director of New York-based research and consultancy company Beverage Marketing Corporation, says: 'It was a surprise, because it was not commonly known that Reinemund was planning on retiring. But she is very effective. She has a great understanding of the business, she's a visionary and she's exceptionally driven.'

As recently as March last year Nooyi was denying suggestions that she was aiming for the top position, saying: 'My boss is very young, so let's keep it at that. We have great chemistry at work.' However, Reinemund's announcement that he was standing down to spend more time with his family left a gap that needed to be filled urgently.

Her outspokenness has often led her to discuss her unusual position in the US corporate world. In a 2002 interview in the United States, she said of her career progression: 'Being a woman, an immigrant and person of colour made it thrice difficult.'

Throughout her career she has championed diversity. In a speech to the South Asian Students' Alliance in January, she praised PepsiCo's moves towards creating a more ethnically diverse workplace.

For corporate India, Nooyi's promotion has come as an inspiration. HSBC India's chief executive, Naina Lal Kidwai, says: 'It's wonderful news. Not too surprising either, given her stature. It's great for India, great for womanhood and great for Pepsi.'

Unilever Asia/Africa president Harish Manwani says: 'This is a proud moment for corporate India as another Indian professional makes it to the very top of a big global organisation.'

Nooyi's first challenge comes from her homeland. A quarter of the country's 25 states have imposed partial or total bans on PepsiCo and Coca-Cola products after a New Delhi-based non-governmental organisation, the Centre for Science and Environment, claimed last week that the companies' colas contained several times the permitted level of pesticides.

On Thursday PepsiCo appealed to the Kerala state high court. PepsiCo India chief Rajiv Bakshi commented: 'We received the order on Thursday ... no grounds have been stated [for the ban].'

The controversy has threatened to escalate into a bilateral dispute, and last week Washington warned that foreign investment in India could be affected. The US Under-Secretary for International Trade, Franklin Lavin, said the ban could turn out to be a setback for the Indian economy.

None the less, PepsiCo has reaffirmed its commitment to the Indian market. Baskshi says: 'PepsiCo's long-term investments in India are not affected,' and adds that the company is prepared to accept any standards for finished products provided there is a standardised testing method.

However, Centre for Science and Environment chief Sunita Narain says both companies have strongly opposed proposals to set up standards for finished products. 'It is strange that there are no standards for finished products in the soft drinks category anywhere in the world, she says. 'The companies are claiming that it's a complex manufacturing procedure, hence there should be standards set for various ingredients such as water and sugar, and not on the finished product.'

She claims the cola giants fear that if India introduced standards for finished products, emerging markets in China and the Far East would follow suit.

Hemphill believes that Nooyi's appointment could help to ease the situation: 'Because of her Indian origins, I think she will have a good understanding of the market. It is well known that Nooyi frequently travels to India to cultivate ties with government officials.'

Another challenge for Nooyi is to counteract concerns about health and, in particular, obesity in North America and western Europe, and the resultant negative publicity for fizzy drinks and salted snacks. In 2005 PepsiCo and Coca-Cola saw their volumes decline by 2.5 per cent and 3 per cent respectively, according to a survey in Beverage Digest

Yet analysts believe Nooyi's sound business acumen will help to continue the company's strong growth trend. PepsiCo will certainly have to maintain its momentum in the 'healthy foods' category, with products like sports drink Gatorade, Tropicana fruit juices and Aquafina bottled water, if it is to hold on to recent success and grow in the face of increasing competition from Coke, whose healthy options include Minute Maid orange juice and the notorious -in Britain, at least - Dasani bottled water.

Meanwhile, many suspect that although Nooyi may tweak the business, essentially she will follow its present direction. Hemphill says: 'She will bring continuity because she has been in a key position for a number of years. I would expect more changes, but not dramatic changes.' He also believes that Pepsi's growth will continue to outstrip that of Coca-Cola. 'Pepsi has been very aggressive in developing the "wellness" end of their portfolio and I would expect them to continue that,' he says. 'Pepsi is probably ahead of the game in that regard.'